Smokin’ Hot Tobacco Stock Picks: Analyst

Despite the health effects and new regulations, many stocks in the tobacco sector are hitting new highs Wednesday. Philip Gorham, analyst at Morningstar, said the sector could continue rallying.

“[The rally] can last until manufacturers can no longer raise prices above the rate of consumption—and I don’t see that point coming any time soon,” Gorham told CNBC.

“We don’t see a kink in the demand curve quite yet.”

Gorham said his “best in class” picks include Philip Morris and Altria .

“But look out of Lorillard, ” he cautioned. “They’re risky, but we don’t think there will be much impact from the FDA investigation.”

Watch: CNBC original documentary 'Cigarette Wars' premieres Wednesday, March 2nd 9p ET. And don't forget to check out the special show page.

______________________________
Scorecard—What He Said:

• Gorham's Previous Appearance on CNBC (Feb. 4, 2011)

______________________________
CNBC Slideshows:

• World's Most Expensive Cigars and Cigarettes

______________________________
CNBC Data Pages:

• Dow 30 Stocks—In Real Time
• Oil, Gold, Natural Gas Prices Now
• Where's the US Dollar Today?

______________________________

______________________________
Where the Other Top Tobacco Stock Stands:

Reynolds American

______________________________
Disclosures:

Gorham does not own shares of PM, MO, LO, RAI or RTI.

______________________________

Disclaimer